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Business Reporter
THE Cotton Company of Zimbabwe (Cottco) has so far paid US$8 million dollars to farmers for this year’s cotton deliveries, the company’s acting principal officer Munyaradzi Chikasha.
In an interview, Mr Chikasha said 54 000 tonnes of the crop had been delivered as of Thursday last week, leaving the company with US$13 million in outstanding payments.
“We have started ginning and we are hoping to clear all outstanding balances using revenue from lint sales,” said Mr Chikasha in an interview.
About two weeks ago, Cottco chairman Mr Sifelani Jabangwe said despite the company having facilities with banks, it was struggling to pay due to the prevailing liquidity constraints.
Meanwhile, Mr Chikasha said the company was taking a prudent spending approach to avoid carryover debts.
“We are being prudent…managing the little resources we have because we are avoiding a situation of debt carryovers since it affects our cash flows,” said Mr Chikasha.
This year, the company had a debt carryover of US$8 million and has been for the past two months struggling to pay the workers and suppliers. The company has however substantially reduced its debt to US$600 000 from the old facilities, Mr Chikasha said.
He said the company had also managed to mobilise funds to pay salaries for May and June
“As for salaries, we managed to mobilize resources for May salaries, and the workers were paid on Monday (last week) and this week, we should settle June obligations.”
Cottco’s intake is expected at about 90 000 tonnes, almost double last year’s volume.
The national output, including from private merchants, is estimated at about 100 000 tonnes.
Cottco, which administers the Presidential Free Cotton Inputs Scheme, a state-assisted programme supporting nearly 300 000 rural households had stopped payments due to liquidity constraints, which resulted in banks failing to release the money.
Zimbabwe’s cotton season runs from September and includes a growing phase from around October to December, a harvesting and sales period from May to August.
At peak, Zimbabwe produced 351 000 tonnes of cotton in the 2010/11 season and the Government has since set a target to raise production to 300 000 tonnes by 2025.
Zimbabwe mainly uses open-pollinated varieties, but indications are that production could go up to as much as 600 000 tonnes with the use of hybrid seeds.
Experts are urging the Government to ramp up the use of hybrid seeds to boost productivity and cut the risk of crop failures as OPVs are getting more susceptible to diseases.
Online Reporter